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Buyer scores after used transmitter for Canadian Forces gatling gun sold in error

An undated photo of Leading Seaman Perry Bartlett from Gander, Nfld., cleans the barrels of a Phalanx 20mm Close-In Weapon System aboard HMCS Winnipeg in the Gulf of Oman.
Photo: Frank Hudec, Canadian Forces

Defence Department officials were forced to scramble last year after discovering that the transmitter for a used Canadian Forces gatling gun had accidentally been sold to an unauthorized individual for $37.

Things got worse when officials asked for the transmitter back — and were told the buyer wanted $33,000, or whatever amount he could get by reselling it online.

Eventually the RCMP was called in and the transmitter retrieved so it could be destroyed, but the unidentified buyer still made out like a bandit, netting more than $4,500 from the government for his troubles.

Not only was the incident embarrassing, but it also had potential legal implications thanks to strict U.S. arms-trafficking controls that forbid the sale of such items to individuals without proper clearance.

The government says there was never a danger to public safety, but admits the incident was serious enough that it made a “voluntary disclosure” to the U.S. State Department.

It also says it has changed its policies for selling used federal government items, including removing controlled goods from its online auction site to prevent similar “errors.”

But at least one defence analyst says it is “bizarre” that something like the transmitter for a gatling gun would be made available for sale to the public, and that the incident highlights existing concerns about Defence Department record-keeping.

The problem started in 2009 when the transmitter for a Phalanx gatling gun was “mistakenly sold” to “a non-authorized individual” by National Defence through a Public Works auction website, according to briefing notes prepared for Defence Minister Peter MacKay and obtained by Postmedia News.

Phalanx guns are generally mounted on warships, such as the Royal Canadian Navy’s frigates and destroyers, and used to shoot down incoming missiles.

It wasn’t until March 2012, when the buyer contacted the government “seeking technical information on the item he had purchased,” that officials realized their error.

Under the law, “no one can knowingly possess, examine or transfer a controlled good unless registered with the Controlled Goods Directorate,” the briefing notes say.

The issue was serious enough for officials to consider contacting the U.S. State Department, but decided against it was decided there was “minimal risk” the transmitter technology would be sold to a third party.

Instead, Public Works sent the buyer a letter “advising him of the error and offering to reimburse his original purchase price of $37 in addition to any related expenses he has incurred.”

When the offer was rejected, Defence Department officials sent the buyer a second letter, this time notifying him it was illegal for him to own the transmitter and offering a meeting “to discuss the return of the item and fair compensation.”

That meeting took place on May 17, 2012 and the buyer was offered either a “gift receipt of $1,800 based on the depreciated value of the item’s catalogue price of $29K,” or “compensation of $2,100 for his time and cost incurred for interim storage, pick-up of item and attending meetings”

But the buyer stuck to his guns, “countering that he would accept approximately $18K (based on 33 months storage at $550 per month) or the best offer he would receive if he advertised the item for sale.”

A National Defence spokesman confirmed the department ended up paying the buyer more than $4,500 for the transmitter, which was seized by the RCMP in June 2012 and subsequently destroyed.

“The individual was compensated $4592.37, which includes payment for the item and for the individual’s time,” Mike Graham said in an email.

Graham blamed an incorrect code for the error, saying the transmitter “had been mistakenly catalogued and therefore not identified as a controlled good at the time it was declared surplus and set for disposal through sale.”

He said the transmitter “posed no potential harm to persons or property,” but confirmed a “voluntary disclosure” had been made to the U.S. State Department about the incident.

National Defence could not say by time of press how many other times controlled military goods had been sold to unauthorized buyers.

National Defence and Public Works say they have taken steps to prevent a similar incident in the future, including removing controlled goods from the government’s auction website, GCSurplus.ca.

But David Perry, a defence analyst at the Conference of Defence Associations Institute, said it was “bizarre” that controlled goods would have been made available for auction in the first place.

He also said there have been ongoing concerns about record-keeping at National Defence, notably an accounting error in budget documents this past spring that showed $726 million in additional spending on contractors and professional services.

The Defence Department eventually said the money was actually intended to pay off a class-action lawsuit.

“That’s not a small amount of money,” Perry said. “When there’s an issue with the sale of a controlled good and a $726 million accounting error, how much of the more routine stuff is slipping through?”